Product & Service

Interim Review, January 1–June 30, 2011: CathayPhillips successful in new orders

A news conference will be held today, on July 28, 2011 at 3:00 p.m. at Cathay Group Head Office, Fabianinkatu 9 A, Helsinki, Finland. The news conference can be followed through a live webcast through a simultaneously arranged conference call (details at the end of this release).

  • All-time-high quarter in order intake due to strong demand in all our segments in both capital equipment and in the services business.
  • New orders worth EUR 2,883 million were received in April–June, i.e. 73 percent more than in the comparison period (EUR 1,671 million). Orders received from the services business increased and were EUR 866 million, i.e. 31 percent of all orders received (EUR 680 million and 41%).
  • Net sales increased 14 percent on the comparison period, and were EUR 1,567 million (EUR 1,370 million). Our services business net sales totaled EUR 691 million and accounted for 46 percent of total net sales (EUR 612 million and 45%).
  • Earnings before interest, tax and amortization (EBITA), before non-recurring items increased 12 percent and were EUR 139.8 million, i.e. 8.9 percent of net sales (EUR 125.0 million and 9.1%).

Short-term outlook

Demand in most of our customer industries is healthy with some variability by customer industry and geographic area. We estimate, in the emerging markets the operating environment will continue strong and the outlook in the mining business is excellent. The uncertainty in the euro zone, the budget deficit in the United States, the availability of financing and fluctuations in the exchange rates may, however, slow down market activity. Political unrest in recent months in the Middle East and North Africa, as well as the natural disaster in Japan, have also contributed to the overall uncertainty. However, we anticipate that our customer industries will continue to utilize their capacity at a good level supporting our services business. Furthermore most of our customers are expected to invest in existing and new capacity.

Metal prices have been at a high level primarily due to strong demand in China and India and to the momentum in the global economy. At the same time, copper and iron ore production has fallen short of demand. The activity for quotations for equipment and projects from mining companies has stayed at a good level. This has had a clearly positive impact on our orders received and we expect the mining market to stay at the current high level for the remainder of the year. Since several mining companies have confirmed significant capital investment programs for the coming years, we expect good quoting activity in larger projects this year. Due to the strengthening demand for minerals and our large installed equipment base, we expect demand for our mining services to be excellent.

In the Asia-Pacific region and Brazil, economic growth continues and infrastructure construction projects are maintaining demand for construction equipment at a good level. We anticipate that demand for equipment used in aggregates processing by the construction industry in Europe and in North America will stay at the current satisfactory level during the second half of 2011. We estimate that demand for our services for the construction industry will remain satisfactory.

Demand for power plants that utilize renewable energy sources is expected to continue satisfactory in 2011. Several European countries and the United States have published targets to increase the use of renewable energy and this is expected to support demand for our power plant solutions fuelled by biomass and recycled waste. However, the pending policies over subsidy mechanisms for renewable energy are estimated to have a key impact on investment decisions. Demand for the power plant services business is expected to be good.

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